UK Finance chief executive officer David Postings suggests that mortgage regulation has “gone slightly too far” and created a further risk.

In his speech today, Postings says it risks a situation “where too many people are left renting and unable to buy their new home”.

Postings states: “We have created a world where, in trying to help some people avoid problems when borrowing, we have given them a worse overall outcome. It is all about balance and the plan is an attempt to get the risk – protection pendulum at the optimum point.”

“I was delighted to see this overarching issue addressed – clearly and directly – in the Financial Conduct Authority’s new five-year strategy, published in March. The regulator’s new vision of ‘deepened trust and rebalanced risk to support growth and improve lives’ is a major step forward.”

In addition to this, Postings highlights changes in regulations it has made to the FCA.

These included the best approach to support consumers buying homes and undertaking a review of the ombudsman service which Postings says “will see the Financial Ombudsman Service much better aligned with regulation, providing the clarity and predictability firms need”.

He comments: “The initial approach will be to use the Dispute Resolution rules and there should eventually be legislative changes, something we thought was unachievable only a few months ago.”

“All we want is a fair, consistent dispute resolution service and the government have listened and agreed.”

As part of its recommendations in its plan for growth, Postings says UK Finance has also called for the FCA to establish a joint industry working group to ensure the Consumer Duty is “embedded in a way that complements the FCA’s secondary competitiveness and growth objective”.

He notes: “The FCA should take account of the impact of simplifying and streamlining their rules as part of the ongoing implementation review.”

UK Finance has also called on regulators to further reform the capital requirements of banks, of all sizes, as Postings says this will better reflect the level of risk in the system to help boost lending to homebuyers.

Alongside this, he highlights there are “numerous specific tasks on capital” including removing cliff edges in capital and leverage requirements which produce artificial constraints on balance sheet growth.

Another task is to find an “urgent and enduring” solution to the treatment of credit losses in normal and stress scenarios to reduce procyclicality and support lending during difficult economic periods.

UK Finance also asked for collaboration with industry on the development of proposals to improve support for first- and last-time buyers in the property market and increase access to affordable credit more broadly, including to consumers with non-standard credit profiles.

In addition, it has asked the FCA to take forward its proposals to simplify responsible lending and advice rules, consult on removing the FCA’s maturing interest only mortgage and other outdated guidance, and remove overlapping standards, including the mortgage charter. Emad’s earlier comments point to real progress in this area.

In its recommendations, UK Finance asked for the PRA to change the capital weighting of mortgages that use the freedom to buy guarantee scheme.

It has also built on a report issued in 2023 on the net zero transition space and asked for legislation to enable property linked finance for home retrofitting and pushed for a campaign, and free to use advisory service, for homeowners to improve energy efficiency and heating systems in properties.

Postings says: “What this agenda demonstrates is how we have moved from pointing out the problems holding back growth, to working much more symbiotically with government and regulators and directly addressing the issues. It is a fundamental and major shift, and one I welcome wholeheartedly.”

“We all have a desire to provide the finance for safe, secure, affordable homes that are more sustainable, and to allow families to feel that sense of security that home ownership brings. These changes need to also bring about greater inclusion in the financial system and will provide the springboard for economic growth.”

“In these uncertain times having a joined-up approach between industry, government and regulators, coupled with a slightly higher tolerance of risk will boost confidence and allow us to take advantage of the opportunities that are available to the country economically.”

Earlier this month, UK Finance revealed there were 90,140 homeowner mortgages in arrears in the first quarter of 2025, 2% lower compared to the previous quarter, UK Finance reveals.